OPEC has agreed its 1st limit on oil output since Y 2008 with Saudi Arabia accepting “a big hit” on its production and agreeing to Iran freezing output at pre-sanctions levels.

The Organization of the Petroleum Exporting Countries Wednesday agreed on a proposal by member Algeria to reduce production by around 4.5%, or about 1.2-M BPD.

Saudi Arabia would contribute around 0.5-M BPD by reducing output to 10.06-M BPD, while Iran would freeze output at close to current levels of 3.797-M BPD and other members would also cut production.

OPEC had also suspended Indonesia from OPEC and hence the exact combined reduction was yet to be calculated. The meeting was still ongoing after around six hours of debate.

Before the meeting, Saudi Energy Minister Khalid al-Falih said OPEC was indeed focusing on significant cuts and hoped Russia and other non-OPEC producers would contribute a reduction of another 0.6-M BPD.

Clashes between Saudi Arabia and Iran have dominated many previous group meetings.

But the tone changed on Wednesday with Iranian Oil Minister Bijan Zanganeh saying he was positive since Iran had not been asked to cut output.

He also said Russia was ready to reduce production.

“Moscow have agreed to reduce their production and cut after our decision,” Mr. Zanganeh said.

The cartel said it would exempt Iran, Libya and Nigeria from cuts as their output has been crimped by unrest and sanctions.

The September deal was seen as a victory for Iran. Tehran has long argued it wants to raise production to regain market share lost under Western sanctions, when Saudi Arabia increased output.

Sources said that out of additional non-OPEC cuts of 0.6-M BPD, OPEC expected Russia to cut by 0.4-M. A Russian ministry source said the figure was “a bit excessive”.

OPEC member Iraq has also been pressing for higher output limits, saying it needs more money to fight the militant group Islamic State.

Paul Ebeling

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